Chief Economists Outlook January 2024. Executive summary
The January 2024 Chief Economists Outlook launches amid protracted weakness in global economic conditions and widening regional divergence. Uncertainty that dominated the outlook over the last year continues to cloud near-term economic developments: 56% of chief economists expect the global economy to weaken over the next year, but another 43% foresee unchanged or stronger conditions.
While there are positive developments, such as easing inflationary pressures and advances in the field of artificial intelligence (AI), businesses and policy-makers face persistent headwinds and continued volatility as global economic activity remains slow, financial conditions remain tight and geopolitical rifts and social strains continue to grow.
Regionally, the results highlight diverging growth patterns. The most buoyant economic activity is still expected in South and East Asia. China remains an exception, with the previous combination of strong
and moderate growth expectations being replaced with largely moderate (69%) expectations for 2024. In the US and the Middle East and North Africa, the outlook has weakened since the September 2023 edition of the Chief Economists Outlook, with about six out of ten respondents expecting moderate or stronger growth this year. In Europe, 77% expect weak or very weak growth in 2024.
Elsewhere in the world, the expectations are for broadly moderate growth.
The survey results reflect the improvement in the inflation outlook for 2024, with expectations for high inflation being pared back across all regions. The majority also expect that labour markets (77%) and financial conditions (70%) will loosen.
This edition of the outlook focuses on
two key phenomena impacting the global economy – geopolitical developments and advancements in generative AI. Almost seven out of ten chief economists expect the pace of geoeconomic fragmentation
to accelerate this year. The majority of respondents say it will stoke volatility in
the global economy (87%) and in stock markets (80%). There appears to be equally strong consensus that recent geopolitical developments will increase localization (86%) and strengthen geoeconomic blocs (80%). Almost six out of ten (57%) also expect it
to increase inequality and widen the North- South divide in the next three years.
Growing global fragmentation is closely intertwined with the resurgence in industrial policies. About two-thirds expect these policies to enable the emergence of new economic growth hotspots and vital new industries, with the majority warning of rising fiscal strains (79%) and divergence between higher- and lower-income economies (66%).
Respondents are almost unanimous in expecting these policies to remain largely uncoordinated between countries, with a different mix of defensive and enabling approaches in high- and low-income economies.
The rapid advances in the field of artificial intelligence put it on top of business and policy agendas in 2024. Respondents are notably more optimistic about AI-enabled benefits in high-income economies than in developing economies, including an increase
in the efficiency of output production (79%) and innovation (74%), with a more mixed picture regarding standards of living (57%). Chief economists are almost unanimous (94%) in expecting productivity gains to become economically significant in high- income economies in the next five years, compared to only 53% for low-income economies. The views are somewhat more divided on the likelihood of generative AI resulting in a decline in trust across high- income (56%) and low-income (44%) economies this year.
